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Trump's 50% tariffs on Brazil ramps up tensions,

volatility

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Brazil stocks set to drop, real bruised after slumping

over 2%

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Tariffs could impact U.S. food prices, coffee and juice

imports

LONDON, July 10 (Reuters) - Brazil's financial markets

looked set for a bumpy start on Thursday, with traders still

trying to grasp U.S. President Donald Trump's shock move to slap

50% tariffs on Latin America's largest economy rather than the

10% previously indicated.

Currency volatility gauges were at their highest since the

back end of April's 'Liberation Day' panic, after the real

slumped as much as 2.8% on Wednesday in reaction to what

Deutsche Bank described as an escalation of tensions.

U.S.-listed shares of Brazilian firms and banks sank in

premarket trading, with Itau Unibanco losing 2.7%, Banco

Santander down 2.4% and state oil firm Petrobras down

nearly 1%.

Bond traders were also bracing for the local market to

reopen. Brazil's bonds have been a strong performer in emerging

markets this year, with international dollar-denominated bonds

returning nearly 8% and local real ones a whopping 20%.

MSCI's dollar-denominated Brazil stock index is up nearly

25%, too, helped by the year's 13% surge in the real.

Graham Stock at RBC BlueBay Asset Management said Trump's

reasoning for the 50% tariff level had centred on his grievances

around a court case against right-wing former Brazilian

president Jair Bolsonaro, as well as legal moves against U.S.

social media firms.

"The economic implications are nevertheless fairly modest,"

Stock said, as just over 10% of Brazil's exports go to the U.S.,

and were worth only around 1% of the former's GDP.

"The risk is that President Lula seeks to exploit his

defiance of U.S. interference as a badge of honour in the run-up

to the October 2026 elections, in which case de-escalation

becomes less likely," he said.

Wednesday's decision by Trump followed a threat on Monday to

impose an additional 10% tariff on the BRICS group of developing

nations - of which Brazil is the 'B' - which he called

"anti-American."

The tariffs on Brazil could have a significant impact on

food prices in the United States.

Around a third of the coffee consumed in the U.S., the

world's largest drinker of the beverage, comes from Brazil and

more than half of all the orange juice sold in the U.S. also

comes from the South American agricultural powerhouse.